Conservative Party conference: families' benefits will be capped at £26,000

The amount that families are able to claim in benefits will be capped at
£26,000, the Chancellor announced yesterday.

George Osborne claimed that it would mean no one, apart from the disabled, would receive more in benefits in one year than the average wage.

The measures are aimed at workless families who receive £500 a week or more.

His aides claim it will save hundreds of millions of pounds from the welfare budget and that 50,000 families will be affected.

The Chancellor said: "For the first time, we will introduce a limit on the total amount of benefit any one family can receive.

"The limit will be set according to this very simple principle: unless they have disabilities to cope with, no family should get more from living on benefits than the average family gets from going out to work."

Mr Osborne said that he and the Work and Pensions Secretary, Iain Duncan Smith, had devised the biggest reform of the welfare state since the war-time work of William Beveridge.

He told the Tory conference that it would result in "a radical new welfare state where it always pays to work, where effort is always rewarded and where fraud can no longer hide behind complexity".

Some voters are likely to be disappointed, however, that the Coalition is still resigned to families taking such a large sum from the taxpayer.

The Chancellor will announce the Comprehensive Spending Review in two weeks.

The welfare budget takes one third of all government spending, Mr Osborne told Tory activists.

The cap will be applied through the housing benefit system in most cases. Families with a total income from welfare benefits of more than £500 a week face a cut in the amount they are paid to cover rent.

In some cases, families receive as much as £800 a week in benefits such as jobseeker's allowance, income support, employment support allowance, council tax benefit, child benefit and child tax credit.

Ian Mulheirn, of the Social Market Foundation think tank, said: "A blanket approach is likely to be unfair.

"The right way to tackle abuse of the benefit system is through tailored welfare-to-work schemes that provide both carrot and stick."